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Flex Ltd (NAS:FLEX)
Beneish M-Score
-2.75 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Flex Ltd has a M-score of -2.48 suggests that the company is not a manipulator.

FLEX' s Beneish M-Score Range Over the Past 10 Years
Min: -6.74   Max: 1.16
Current: -2.75

-6.74
1.16

During the past 13 years, the highest Beneish M-Score of Flex Ltd was 1.16. The lowest was -6.74. And the median was -2.51.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Flex Ltd for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 0.9367+0.528 * 0.8975+0.404 * 2.0798+0.892 * 0.9339+0.115 * 1.1047
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2108+4.679 * -0.052-0.327 * 0.9945
=-2.48

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $2,045 Mil.
Revenue was $24,419 Mil.
Gross Profit was $1,608 Mil.
Total Current Assets was $8,315 Mil.
Total Assets was $12,385 Mil.
Property, Plant and Equipment(Net PPE) was $2,258 Mil.
Depreciation, Depletion and Amortization(DDA) was $515 Mil.
Selling, General & Admin. Expense(SGA) was $955 Mil.
Total Current Liabilities was $6,572 Mil.
Long-Term Debt was $2,709 Mil.
Net Income was $444 Mil.
Non Operating Income was $-48 Mil.
Cash Flow from Operations was $1,136 Mil.
Accounts Receivable was $2,338 Mil.
Revenue was $26,148 Mil.
Gross Profit was $1,545 Mil.
Total Current Assets was $8,741 Mil.
Total Assets was $11,653 Mil.
Property, Plant and Equipment(Net PPE) was $2,092 Mil.
Depreciation, Depletion and Amortization(DDA) was $540 Mil.
Selling, General & Admin. Expense(SGA) was $844 Mil.
Total Current Liabilities was $6,755 Mil.
Long-Term Debt was $2,026 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(2044.757 / 24418.885) / (2337.515 / 26147.916)
=0.08373671 / 0.08939584
=0.9367

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1545.34 / 26147.916) / (1608.061 / 24418.885)
=0.05909993 / 0.06585317
=0.8975

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (8315.126 + 2257.633) / 12384.981) / (1 - (8740.9 + 2092.167) / 11652.891)
=0.14632416 / 0.0703537
=2.0798

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=24418.885 / 26147.916
=0.9339

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(540.49 / (540.49 + 2092.167)) / (515.367 / (515.367 + 2257.633))
=0.2053021 / 0.18585179
=1.1047

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(954.89 / 24418.885) / (844.473 / 26147.916)
=0.03910457 / 0.032296
=1.2108

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((2709.389 + 6572.205) / 12384.981) / ((2025.97 + 6755.091) / 11652.891)
=0.74942335 / 0.75355214
=0.9945

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(444.081 - -47.738 - 1136.445) / 12384.981
=-0.052

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Flex Ltd has a M-score of -2.48 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Flex Ltd Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
DSRI 0.95081.38450.5811.35120.9140.95611.01371.15320.86510.9367
GMI 0.99281.15431.03180.81930.90711.07611.04550.8970.93340.8975
AQI 0.94280.89740.26810.54170.75021.0181.59061.06471.08422.0798
SGI 1.23321.46171.1230.77911.17971.03170.80321.10771.00150.9339
DEPI 1.13440.77690.97890.91511.38680.89870.97211.22460.82191.1047
SGAI 0.9571.00841.08031.00580.8861.06091.14230.98070.96391.2108
LVGI 0.97511.14011.46190.96970.99060.98530.9661.05340.96840.9945
TATA 0.0125-0.0621-0.6506-0.0733-0.009-0.0304-0.0747-0.0621-0.0212-0.052
M-score -2.25-2.04-6.25-2.98-2.52-2.60-2.75-2.55-2.71-2.48
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